The Wales Tourism Alliance would like to acknowledge, on behalf of its members, the contributions made by both governments to securing the future of the tourism industry during the pandemic. There is no question that prompt action and the delivery of financial resources saved jobs and businesses. It was the hardest hit industry in terms of job losses and loss of earned income in Wales and has, according to EMsi labour market research, been the slowest to bounce back. Whilst this was true for the UK generally, over-all recovery is happening more quickly in Wales than elsewhere, due primarily to a proportionally larger public sector (where jobs were protected).
Despite solid recovery in the non-service private sector and high demand in parts of the service sector, e.g., care, tourism remains a vulnerable industry. While parts of Wales had a good summer, it is still exposed to a range of financial shocks and threats and we urge Welsh Government to remember that we still need short, medium and long-term support to maximise our contribution to the Welsh economy.
Please note that, while we have focused on the forthcoming budget, some of the matters raised may also be of interest to PAC and the ETRA Committee. We would be happy for you to share our thoughts with them.
As an interested, independent organisation representing the Tourism industry in Wales, external to Welsh Government, it is currently not possible to effectively scrutinise Welsh Government support and investment and its impact on the growth of the Wales visitor economy.
This is true for direct funding of Visit Wales and its subsequent use, but just as importantly, spending in other departments, or other parts of the economy portfolio, which have an indirect effect on tourism; looking to tourism to help support other government objectives e.g., health and wellbeing, local government delivery, education and skills.
The annual report on the Welsh Government’s consolidated fund provides us with no information with which we can usefully use to respond to this consultation. The fact that the final current annual budget MEG for the economy is £1.75bn tells us nothing about investment in tourism. The narrative accompanying the budget identifies some key areas of expenditure, which could include tourism. However, without overt reference, it is unlikely that those recipients will think of how our industry can help them fulfil their aims and vice versa; apprenticeships, Brexit transition (despite a number of tourism programmes being supported through EU funding streams), agriculture (rather than rural economy), culture and sport.
Unlike the British Tourist Authority (Visit Britain & Visit England), Visit Scotland and Tourism Ireland, which are arms-length national tourism bodies, Visit Wales does not produce a standard, publicly available, annual report and set of accounts. This means understanding its budget is extremely difficult and we have to rely on periodic statements made by Visit Wales or intelligence from recipients of various grants and loans where they are itemised in those recipients’ accounts or where there is willing disclosure. Visit Wales statements are invariably made at a time of welcome investment in tourism activity, but without contextual reference to the department’s over-all budget.
Recommended Action: Visit Wales produces an annual report and set of departmental accounts.
The “Welcome to Wales: Priorities for the visitor economy 2020 to 2025” Plan contains no budget or specific KPIs. It is, therefore, not possible to establish to what extent the Welsh Government’s investment actually contributes toward growth. We understand that there is £60m behind this plan (in partnership with the Bank of Wales) but we have no access to the basis on which that figure was reached, how much of the plan it covers or what percentage of Visit Wales’s budget that represents.
This situation also means we will find it difficult to track the effect of the loss of programmes supported through EU funding streams, e.g. Regional Tourism Engagement Fund (RTEF). Welsh Government has introduced new programmes of financial support which will need to be scrutinised once they have had time to bed in.
As this is the established position, we have no means of assessing year on year progress, not least financially. There is no practical route into identifying secondary support for tourism in other departments.
Recommended Action: Annual report to include consistent standardised reporting on achievement against KPIs. Also to include spend and results in other departments
In order to be able to assess the impact that the Welsh Government’s support makes toward growth, an accurate breakdown of the expenditure on marketing, product development, useful research and tourism training should be provided by the Welsh Government against ONS figures for tourism growth in Wales. Accepting that a direct link of causation between spend and growth is not always easy to demonstrate, we are not in a position to begin assessing what is effective spend, and what is not, without understanding what is being spent in the first place.
The Budget for 2022/23 will not be released until the 20th December 2021. Even when it is released, attempts to review previous budgets give us little confidence that it will be possible to accurately ascertain the level of direct tourism spend made by the Welsh Government toward tourism industry support - even in the four activities above.
Arguably, if the tourism industry is ever going to assist the Welsh economy to become truly sustainable, we need to establish the correlation between tourism spend and the contribution to growth made by the Welsh Government, in order to be in a position to suggest directional changes for the future development of the visitor economy. While some sectoral bodies within the industry here in Wales are able to engage in some research, most of the resources for the most relevant research lie within Welsh government. We do not know what Visit Wales’s research budget is, but it does not appear to be sufficient to craft a detailed, horizon scanning body of data to inform strategy development. We note that Visit Wales does commission external research via consultancy.
Even so, the general point remains that, overall, the wider industry relies on the government’s own figures, without independent capacity of its own to offer further assistance. That limits scrutiny by the industry of the effectiveness of spend and limits constructive challenge - emphasis on “constructive” - which it can offer.
With, hopefully, the worst of the pandemic behind us, the need to mitigate the impacts of Brexit, and the need to meet the challenges faced in relation to environmental recovery and changing consumer expectations, this simple level of detail is not just required, it is essential in order to assist both governments and the private sector in planning the Tourism economy for the longer term. Indeed, even this is not enough in itself, we need to be able to go much further and be able to drill down into detail beyond mere departmental budget headings.
Our main observation therefore (beyond the expected observations of value for money, etc.) is that a key priority should be the development of a comprehensive breakdown into both direct and indirect spend by the Welsh Government on the Visitor economy and an accurate assessment of that spends impact on actual growth’.
Cost implication: Reforming budget presentation and preparation of a Visit Wales annual report and set of accounts is not cost-free, but the information needed will already be collected by Welsh Government.
Efficiency & Effectiveness; the Value of Engagement
The reverse side of the scrutiny coin is the industry’s keenness to be a constructive friend to Visit Wales. It is primarily made up of the small, private business which characterise the Welsh economy and no decisions on government investment in tourism will maximise its leverage if it is not fully informed by this majority of the industry.
Welsh Government reformed the structures for engagement between the industry and Visit Wales seven years ago. The four regional Fora who meet with Visit Wales are led by chairs from the private sector, paid by government. These replaced four regional partnerships, private sector organisations which received arms-length funding from government, but were perceived confidently as independent advocates and two-way conduits of necessary information.
Engagement with the fora has declined, especially seriously in south-east Wales although the picture is not consistent across the four fora. Therefore, their value as two-way information conduits needs assessing. Disenchanted larger tourism businesses are looking to engage directly or through other structures like growth deals and, to a varied extent, cross-industry bodies like local skills partnerships. Smaller businesses claim that the fora are not representative - which may be unfair but they disengage as a result
While getting into the detail of industry concerns on this is not for this committee, we would like to see a commitment in the budget to fund an independent efficiency and effectiveness review of the current structure. That should include a qualitative assessment of how the many voices, but clear messages from the industry are used to maxmise the effectiveness of Visit Wales in meeting both the industry’s and Welsh Government’s priorities. It should, of course, be a virtuous and mutual advantageous partnership. The WTA is willing to assist with this work.
Cost implication: Previous reviews have cost in the region of £200k, which is no small sum. As Visit Wales is part of a government department, the cost should be met from its own Central Services and Admin MEG, not the Visit Wales’ own budget. This proposal cannot reduce funding made available for tourism.
During the height of the pandemic response, tourism was comparatively well-protected as the result of frequent engagement with the Fora and other industry leads giving real time feedback.
While that intensity of engagement has reduced, meetings continue so that Welsh Government can glean feedback re potential steps it might take to contain covid. These tend to be at short notice which means attendees may not be fully armed with the quantum details of the financial hit implicit in any proposals.
Nevertheless, the following points re finance have been raised by our members in relation to the fragility of recovery, all of which have been made known to Welsh Government and which we would hope to see acknowledged in the budget as well as other policy areas:
- Rising cost of goods and services
- Shortage of staff; immediate and longer term
- Decrease in capacity to earn income; staff shortages, covid regulatory requirements, deferred demand reducing availability
- Investing in greening businesses at a time of reduced savings
- A rapid change in the needs, demands and expectations of both new and existing customers
- Increasing wages and costs of employment, e.g., NI contributions
To be clear, there is acceptance that staff should be properly treated both financially and via working practices. There is also support for green modernisation, but none of this comes for free.
As these challenges are biting at the same time, we urge Welsh Government to resist any further downward pressure on the industry via the budget. The challenges to tourism as an industry are not unique to Wales and were recognised in the UK budget in terms of non-domestic rates and support for culture. We ask Welsh Government not to divert the consequentials away from meeting challenges which apply equally in Wales:
- Extend the business rate relief period for tourism businesses and to introduce the equivalent of the new one year 50% business rates discount for retail, hospitality, & leisure sectors.
Tourism is currently competing for staff with other industries - immediately and in the long term. While the industry in Wales needs to take its own steps to make itself more attractive to different types of employee, employer and investor, Welsh Government has an important role in policy development to achieve that shared aim
An annual budget does not lend itself to detailed discussion of multi-year investment. The Hospitality & Tourism Regional Skills Partnership will be giving evidence to Welsh Government shortly which will be of interest to you; WTA will have contributed to that.
However, while it will take some detailed consideration about what skills will add value to the industry, we would hope to see the following in the forthcoming budget:
However, if we are to take non-car transport options seriously, we would expect to see considerable finances committed to new rolling stock on lines serving popular tourism destinations. Further, existing support for bus companies could include clearer conditionality on maintaining consistent services on local routes accessing various visitor destinations; these are less dependent on free bus pass customers too.
Even so, car use will dominate travel for some time and we would recommend a clear financial signal on publicly accessible electric vehicle charging stations as well as support to individual businesses for on-site installation mentioned earlier.
Wales Tourism Alliance – 21st November 2021